Finance Minister Michael Noonan has said he believes the country’s main banks will slash their high variable rates if their customer bases come under “threat” from new competitors.

Senior bank executives told Mr Noonan last week that they had put in place a series of “options” for borrowers, which would allow them to reduce their monthly payments.

These include fixed rates that are lower than variable rates.

Mr Noonan has urged mortgage holders to contact their banks and switch provider “if the offer is not satisfactory”.

But he is understood to have refused to request banks to slash their rates.

The minister is instead banking on the prospect of them doing so voluntarily as a result of increased competition.

“Competition is the best long-term way of reducing interest rates paid by Irish borrowers and ensuring that Irish banks offer a sustainable product range,” Mr Noonan said in response to a parliamentary question by Mayo Fine Gael deputy Michelle Mulherin.